Is Bill Gates Doing Himself Any Favors?

April 23, 2002

By Dan Carney There's no doubt about who's the smartest guy in Courtroom 11 of Washington's federal courthouse these days. Even in a chamber clogged with $700-per-hour legal eagles, Bill Gates has no peer. His testimony in the "remedies" portion of the landmark antitrust suit has been precise and informed. He has tenaciously sparred with his cross-examiners on subjects both legal and technical. Disrespectful? Never. Clearly the Microsoft chairman could teach Bill Clinton a thing or two about how to quibble over the meaning of "is" without looking smug or evasive.

For all his poise and prowess on the stand, though, Gates may be doing his cause more harm than good. In this case -- in which nine states are pushing for tougher remedies than those in the settlement Microsoft struck with the Justice Dept. -- both sides seem to do better when the other guys' witnesses are on the stand.

The states' case, presented first, suffered from a lack of star-quality witnesses and jaw-dropping evidence. The attorneys general scored few direct hits. And they never seemed to make a compelling argument for additional remedies against Gates & Co. You could almost hear the gears going in the minds of Microsoft's attorneys when the plaintiffs rested: Should they mount a defense at all?

NOT-SO-EXPERT. They opted to go ahead, however -- and now may regret it. Gates has certainly been an improvement over the company's first round of witnesses in the remedy hearings, which included an economist "expert witness" with no experience in antitrust. Chairman Bill's testimony has also been a vast improvement over his disastrous taped deposition in 1998, when he appeared distracted and disinterested, fidgeting in his chair. The tape prompted laughter from Judge Thomas Penfield Jackson, who was hearing the Microsoft antitrust case.

These days, Gates's testimony is giving Judge Colleen Kollar-Kotelly the chance to evaluate the validity of Microsoft's claims straight from the chairman's mouth. It's also giving the states' lawyers the chance to float ideas for modifying their proposals if it turns out she shares any of Microsoft's concerns.

Steven Kuney, the states' chief attorney cross-examining Gates, made a number of suggestions for changes. He did so in the form of questions to Gates, which usually began with a lead-in such as: "Would it allay your concerns if we...?" Gates answered the questions, but they were really meant for the judge. Kuney "is setting up this middle ground," says Howard University antitrust professor Andrew Gavil. "He's showing how she might tweak the remedies a little."

THOUSANDS OF WINDOWS? Microsoft's arguments certainly sound alarming. It asserts that the Justice Dept. settlement is already quite onerous, and the states' additional remedies would all but force it out of business. For example, a provision requires Microsoft to offer a version of Windows that would allow any PC maker or consumer to delete software applications from the basic operating system.

The Colossus of Redmond contends that this would cause it untold headaches. Microsoft says it would have to test each one of these modified systems to make sure they all conform to its exacting standards. Result: Tens of thousands of different versions of Windows, each of which Microsoft would have to approve.

Another provision on compatibility would give competitors enough knowledge about Windows to make cheaper imitations of it -- and unscrupulous pirates could be tempted to make illegal knockoffs, Microsoft officials insist. The states counter that this is little more than a "doomsday defense." But for all the time they had to put their own witnesses on the stand, they were never able to shoot holes in Microsoft's argument.

BITS AND PIECES. The states' witnesses were a parade of Lilliputians. Business executives who could talk about Microsoft's behavior in the market but had no expertise on how to craft an antitrust remedy. Economists and law professors who could opine on remedies but had no real expertise in software. If there was an argument that Microsoft was being unreasonable, it was spread in bits and pieces over many witnesses.

Then came Bill Gates himself to hold forth on the merits of Microsoft's claims. Kuney went through those claims one by one and asked Gates to flesh them out.

Take their exchange over how Windows deals with software made by competitors. The states want Microsoft to give competitors "reasonable access" to view portions of Microsoft's ultrasecret source code at a secure facility. Gates asserts that this provision would give those competitors the ability to imitate Windows, since they would be able to view the source code in its entirety. The states say the provision would allow them to look only at the portions necessary to effectively build their programs on the Windows platform.

COURTROOM CUT-UP. On cross-examination, Kuney established that Microsoft's interpretation was based on a particular reading of "reasonable access." Gates said it dealt with such questions as "who could get in [to the secure facility], how many people get in, and at what time of day" -- not about how much of the code they could view.

Kuney asked if Gates would be satisfied if language were put in clarifying the limits of code viewing and specifying that nothing in the provision was meant to allow any copying of Windows. Nothing doing, Gates replied, in essence. Perhaps the judge will disagree.

Gates has been a sharp and, at times, even entertaining witness. Take the time when Kuney began a question: "Do you remember your testimony yesterday...?" to which Gates quickly responded "Yes." The courtroom erupted in laughter.

SEE WHAT STICKS. Gates is the first witness on either side who can put all the technical and legal aspects into a big picture. His argument is pretty straightforward: He thinks the remedies Microsoft agreed to in its settlement with the Justice Dept. are already too harsh. But his presence has allowed the states to bounce ideas about additional remedies off him, to see if any stick in the mind of the judge.

Chairman Bill has certainly taken a lumbering, plodding case and made it interesting. But at this point, maybe that's the worst thing that can happen for Microsoft. Carney, who covers legal affairs for BusinessWeek in Washington, D.C., has been following the Microsoft trial